Tuesday, March 09, 2004


Chambers on GDP

A few days ago, Russ Nelson pointed out that GDP was a better measure of trading than it was of national prosperity.

John Chambers, in the April issue of Fast Company (p. 32, didn't find it on line), begs to differ. Chambers says:
"There's a one-to-one correlation between GDP growth and productivity growth . . . and a 0.98-to-one correlation between the percentage of capital investment going into your economy and productivity growth."
Well! Maybe nobody told Chambers about, "you do my laundry and I'll do yours," because this kind of activity clearly grows GDP, while productivity stays the same as if we each do our own laundry.

This isn't hypothetical for the info economy. If I used to take my film down to the drugstore to be developed but now use a digital camera and do it myself, the superior productivity of digital photography does not translate into increased trading (i.e., GDP).

Is there something I'm missing? Or is Chambers, as reported in Fast Company, all wet?

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